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Opinion: Have Jetliners Escaped The Boom-Bust Cycle?

Has the commercial aviation industry finally vanquished the cycle? Even thinking such a thing sounds hubristic, but it is difficult to argue with the numbers.
Since the jet age began, the market has seen a recurring pattern of roughly seven good years followed by three bad years, with deliveries in the bad years falling 30-40%. Yet since 2004, the industry has enjoyed strong growth, with the exception of last year’s hiatus (due largely to the single-aisle airliner production pause ...

One could argue that if people were to accept a lower level of safety of aviation -- which would still be higher by some orders of magnitude than the safety level the same people accept when driving in a car or crossing a street -- the general cost of the system could again be significantly reduced. With the competitiveness compared to other modes of transportation further improved, another major increase in traffic would result. Just sounds a bit cynical and would therefore probably be very difficult to digest for the public in our hyperventilating "media societies".

90% of the "safety" costs are incurred on the ground in the form of security theatre, and in landing fees to airports that have monopolies because of their utterly pointless TSA security theatre investment.

There are tens of thousands of regional airports worldwide that could massively lower costs, and flight distances, all with just a few sets of airstairs and a cast iron roof for passengers to wait under. But they can't.

No mention is made of the impact of deregulation and the resulting demand generated from dramatically lower ticket prices due to increased competition. Air travel is no longer a luxury good for special occasions. It is cheaper and faster than driving, and so has become a staple consumable for the masses.

Single aisle is 70-80% of unit backlog for Boeing and Airbus, and is six to eight years of production. LCCs and the need for network carriers to respond is behind it. Europe deregulated in 1999 and the last decline in your chart is in 2003. Since 2003 Ryanair by itself has added enough aircraft to fill that valley and then some. It is hard to have an eight year cycle with eight years of production in backlog.

It takes decades for this to work its way through an economy. The US started twenty years before Europe and has consolidated to four big players after forty years. They are all making lots of money which means competition is being held in check, not a great indicator of future fare reductions. Europe still has lots of carriers and lots of pressure on fares. The rest of the world is a decade or two behind Europe.

Eventually Boeing and Airbus will work through their backlogs. Eight years is too long to wait for an airplane. In ten or fifteen years Europe's airlines will have consolidated to something like what the US now has. Absent catastrophe I doubt a contraction before then, but when fares stop dropping air travel won't grow faster than the population.

With backlogs at more traditional levels and lowered growth in travel, you could see boom/bust return. Who knows, maybe by then China will decide to allow real competition and we'll get another twenty years.

How much will airline failures, such as Air Berlin, mean to supply of leased aircraft available?

Further, with the "rebound" of the economies in many nations, what is the effect of the "approved" inflation rates? Remember, many airlines are lower cost which are the passengers who can least afford the rate hikes.

Seemingly, the back logs mentioned are very proven aircraft such as the 737-series. What effect would a much cheaper Chinese made competitor mean?

Interesting to see Air Cargo on the rise Qatar seems to one of the reasons behind this. With the feud between them and the other Arab states. So maybe there will be a more 747-8Fs sold after all. But I have a feeling that there are so many 748s sitting in the desert unsold that production will stop sooner rather than later.

The "Fake Money" system instituted since 2008 (arguably since 1972) accounts for the rise in financial assets - airliners ARE financial assets - accounts for much of this current cycle. We are in an era of negative interest rates, lowest for 5,000 years and in the search for yield airliners are a scarce commodity.

Airliners, like other financial asssets are (falsely) priced at the whim of global central banks. The cycle will end with the fake money system crash. Which is any day now. It will be a doozy!

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